Technology cost drivers for a potential transition to decentralized manufacturing

Popular dialogue around additive manufacturing (AM) often assumes that AM will cause a move from centralized to distributed manufacturing. However, distributed configurations can face additional hurdles to achieve economies of scale. We combine a Process-Based Cost Model and an optimization model to analyze the optimal location and number of manufacturing sites, and the tradeoffs between production, transportation and inventory costs. We use as a case study the commercial aviation maintenance market and a titanium jet engine bracket as an exemplar of a class of parts that are not flight-critical. We run our analysis for three different scenarios, one corresponding to the current state of the technology, and two which represent potential improvements in AM technology. Our results suggest that the cost-minimizing number of manufacturing locations does not vary significantly when taking into account a range of plausible improvements in the technology. In this case, distributed manufacturing is only favorable for a set of non-critical components that can be produced on the same equipment with minimal certification requirements and whose annual demand is in the tens of thousands. Distributed manufacturing is attractive at lower volumes for components that require no hot isostatic pressing